Non-banking finance company, Bajaj Finance on Tuesday reported a 14% year-on-year growth in net profit to Rs 3,912 crore.  Assets Under Management grew by 31% y-o-y to 3.54 trillion. However, loan losses and provisions for the June quarter went up to Rs 1,685 crore compared to Rs 995 crore in the same quarter of previous years. New loans grew 10% y-o-y to 10.97 million. Gross NPA was at 1.06 while net NPA was at 0.47 and this was the lowest among the industry players, the company said. New loan books grew by 10% to 10.97 million and customer franchises rose by 21% to 88.11 million.

Sanjiv Bajaj, chairman, of Bajaj Finance, said Q1FY25 had started on a mixed note for the company. “While our volume growth, AUM growth, NIM and operating expenses remained strong, provisions on loans have been higher,” he said. For FY25, Bajaj expected normalization to pre-pandemic metrics across most parameters. There will be a more balanced performance going forward, he said.

FY24 presented challenges for the company as RBI halted the sanction and disbursal of two product lines due to deficiencies in the key fact statements. The company has complied with all the necessary conditions and RBI removed the restrictions in May this year, Bajaj told shareholders in the BFL AGM in Pune.

Bajaj said BFL’s subsidiary company, Bajaj Housing Finance (BHFL) has started preparations for its IPO and filed DRHP on June 24. BHFL just crossed AUM of Rs 97,000 crore and in the next two months will cross the milestone of Rs one trillion, Bajaj said. Their market share was relatively low and there was significant headroom to grow reasonably and profitably in the coming years, Bajaj said. BHFL has been ranked among India’s largest housing finance companies in seven years with AUM growing at a CAGR of 72% to Rs 91,000 crore (March ’24) and profit grew at a CAGR of 156%, he said. Home loans contributed around 60% of the portfolio and out of this 90% of the home loans pertained to lower-risk home loans for salaried and self-employed. There was a rise in consumer demand across retail and commercial mortgage products with retail mortgages expected to grow by 13-15% over the next three to five years which was favourable for BHFL.

Sharing a medium-term outlook for the company, Bajaj said they had crafted a visionary blueprint long-range strategy for the next decade that shapes their ambition, strategy, approach and growth for customer share, market share and corporate share. The blueprint envisages the company to become a dominant payments and financial services company in India over the medium term. The blueprint anticipates rapid growth for India. Bajaj foresees a 7% growth rate for FY25 and FY26 driven by structural reforms, deregulation, infrastructure investments and new measures for liberalisation. Technology and data analytics would be at the forefront of the company’s transformation journey, he said.

In FY25 the company was embarking on various new initiatives in digital platform, Gen AI, cyber security, compliance and enterprise data warehouse. To manage scale and resilience, the company was selectively investing in technology companies and in FY24 the company had invested Rs 93 crore for a 41.5% stake in mobile app development company, Snapwork and a 26% stake in lending solutions software product company, Pennant Technologies for Rs 267 crore.

BFL MD, Rajeev Jain in his FY25 guidance said BFL would add 12-14 million customers and AUM growth of 26-18%. Jain said they would see a 30-40 basis moderation in the net interest margin in HIFY25 owing to an increase in the cost of funds and the company pivoting towards secured assets.  The consolidated cost of funds for BFL was at present at 7.74%.